Question

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria's owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: Fixed Cost per Month Cost per Pizza $ 3.80 cost per Delivery $ $ 5,220 630 $ 0.95 Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 3.50 $ 1.50 $ $ $ $ 540 275 1,830 820 $ 0.15 In November, the pizzeria budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Data concerning the pizzeria's actual results in November appear below:

Answer 1

Answer-

MILANO PIZZA
Flexible Budget Performance Report
For the month ended November
	Revenue & Spending Variance		Activity Variance
Particulars	Variances	Remark	Variances	Remark
	$		$
Revenue	680	Favorable	540	Favorable
Less:-Expenses
Pizza ingredients	-273	Unfavorable	-152	Unfavorable
Kitchen staff	-61	Unfavorable	0	None
Utilities	-292	Unfavorable	-2	Unfavorable
Delivery person	0	None	21	Favorable
Delivery vehicle	146	Favorable	9	Favorable
Equipment	0	None	0	None
Rent	0	None	0	None
Miscellaneous	52	Favorable	-6	Unfavorable
Total Expenses	-428	Unfavorable	-130	Unfavorable
Income from operations	252	Favorable	410	Favorable

Explanation-

MILANO PIZZA
Activity Variance
For the month ended November
Particulars	Flexible Budget	Planning Budget	Variances	Remark
		$	$
Revenue	1240 pizzas*$13.50 per pizza=16740	1200 pizzas*$13.50 per pizza=16200	540	Favorable
Less:-Expenses
Pizza ingredients	1240 pizzas*$3.80 per pizza=4712	1200 pizzas*$3.80 per pizza=4560	-152	Unfavorable
Kitchen staff	5220	5220	0	None
Utilities	$630+(1240 pizzas*$0.05 per pizza)=692	$630+(1200 pizzas*$0.05 per pizza)=690	-2	Unfavorable
Delivery person	174 deliveries*$3.50 per delivery=609	180 deliveries*$3.50 per delivery=630	21	Favorable
Delivery vehicle	$540+(174 deliveries*$1.50 per delivery) =801	$540+(180 deliveries*$1.50 per delivery) =810	9	Favorable
Equipment	275	275	0	None
Rent	1830	1830	0	None
Miscellaneous	$820+(1240 pizzas*$0.15 per pizza)=1006	$820+(1200 pizzas*$0.15 per pizza)=1000	-6	Unfavorable
Total Expenses	15145	15015	-130	Unfavorable
Income from operations	1595	1185	410	Favorable

MILANO PIZZA
Revenue & Spending Variances
For the month ended November
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	1240 pizzas*$13.50 per pizza	16740	17420	680	Favorable
Less:-Expenses
Pizza ingredients	1240 pizzas*$3.80 per pizza	4712	4985	-273	Unfavorable
Kitchen staff		5220	5281	-61	Unfavorable
Utilities	$630+(1240 pizzas*$0.05 per pizza)	692	984	-292	Unfavorable
Delivery person	174 deliveries*$3.50 per delivery	609	609	0	None
Delivery vehicle	$540+(174 deliveries*$1.50 per delivery)	801	655	146	Favorable
Equipment depreciation		275	275	0	None
Rent		1830	1830	0	None
Miscellaneous	$820+(1240 pizzas*$0.15 per pizza)	1006	954	52	Favorable
Total Expenses		15145	15573	-428	Unfavorable
Income from operations		1595	1847	252	Favorable